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Investor compensation

Do you have investments in shares, bonds or other financial instruments? Then you are aware that their value can go up and down. If you incur a loss, then it is at your own risk and you will not be compensated. Investor compensation covers other types of risk. Something may go wrong with the firm that manages your investments and executes your orders. The investor compensation scheme guarantees that you will get your investments back, up to EUR 20,000.

Protection for investors

The investor compensation scheme protects customers in case something goes seriously wrong with a firm that provides investment services. For example, a firm may go bankrupt while its management has engaged in fraud or administrative malpractice. Firms that provide investment services are under a statutory obligation to segregate their own capital from their customers’ investment assets. This ensures that such assets are kept safe if anything should go wrong. However, if a failing firm has not sufficiently segregated these assets, it runs the risk of taking investors’ assets down with it. Investor compensation is a scheme that compensates investors for such losses.

Please note: the investor compensation scheme does not protect investments with a company that has not received a license to provide certain investment services, including those that may only provide advice on financial instruments.

Not all types of investments are protected by the investor compensation scheme. Financial instruments and money are protected, but cryptos, for example, are not included in this definition.

Compensation up to EUR 20,000

Have things gone completely wrong at the firm that manages your investments? Then you can rest assured that your will get your investments and money back, up to EUR 20,000 per person per firm. If you hold an investment account with your partner, your combined maximum compensation will be EUR 40,000.

Who can get investor compensation?

The investor compensation scheme is available to private investors. Small enterprises that are permitted to publish a summary balance sheet are also eligible. There are specific exceptions, however.

Who cannot get investor compensation?

Specific individuals and firms are not eligible for investor compensation. They are:

  • Managing and supervisory directors, asset managers and personally liable partners of the investment firm in question
  • Individuals holding 5% or more of the capital of the investment firm in question
  • Professional market players and investors such as banks, insurers, pension funds and government bodies.

Dutch investor compensation scheme

The Dutch investor compensation scheme is available to investors investing through a Dutch financial corporation. Financial corporations are banks, investment firms and investment fund managers that are also authorised to manage private assets. To be covered by the Dutch investor compensation scheme, they must be located in the Netherlands or have a European branch in the Netherlands.

Foreign investor compensation

Are your investments through an investment firm whose head office is in another country? Then they will usually be covered by that country's investor compensation. In all countries of the European Economic Area (EEA), which include all EU Member States, Norway, Iceland and Liechtenstein, investor compensation protects your investments and money up to EUR 20,000. Some countries offer higher compensation. Often, banks and investment firms headquartered outside the EEA are subject to different schemes, but they have the option of joining the Dutch investor compensation scheme. You can ask your financial corporation which investor compensation applies.

Who funds the investor compensation scheme?

The Dutch investor compensation scheme is paid for by the financial corporations it covers. Together, they ensure that sufficient money is available to compensate all affected investors up to EUR 20,000. De Nederlandsche Bank (DNB) ensures that affected investors receive their payout, in tandem with Stichting Beleggers Compensatiefonds. This is a foundation that administers the funds needed to make the payouts. 

Supervision of investment services

Financial firms providing investment services must segregate their capital from their customers’ invested assets. The Dutch Authority for the Financial Markets (AFM) supervises their compliance with this statutory obligation, and will try to intervene in good time if asset segregation does not function the way it should. If things should go wrong after all, for example due to bankruptcy and fraud, DNB will administer the investor compensation scheme.

Money in your bank account is also protected

Money in your bank account is protected under a different scheme: the Dutch Deposit Guarantee Scheme. If a bank should go bankrupt, you will get your money back, from 1 cent to EUR 100,000 per person per bank. Read more about the Dutch Deposit Guarantee Scheme.

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